Personal Property Audits

The State Board of Equalization (SBOE) reached a court settlement with various public utility properties in lawsuits dating back to 1990. As part of the settlement, the SBOE mandated and implemented a statewide audit plan for tangible personal property. The audit plan requires audits of various accounts annually. Accounts to be audited are randomly selected by the Tennessee Division of Property Assessments.
The basic goals of the personal property audit program are to verify that the information reported by the taxpayer is accurate and that the appraisal on the account is correct, to update assessment rolls, to assist property owners in understanding reporting requirements, and to create equity by assuring that everyone pays their fair share.

Types of Audits

  • Desk Audits – Desk audits are audits done in the assessor’s office on the tangible personal property schedules filed by property owners each year. A desk audit is an in-house review of the schedule. The ten groups, leases and non-standard values are reviewed for accuracy and consistency.
  • Field Audits – A field audit occurs when a representative from the assessor’s office makes an on-site visit to the business location and confirms the totals in each group on the tangible personal property schedule for completeness by working with the business owner. The appraised value of the business determines the procedures to be used.
  • Audit of Small Accounts – The business owner is required to provide a detailed listing of all tangible personal property used in the operation of the business including items personally owned, not owned, borrowed or leased. The listing is to include a description, year acquired and costs of all assets. If the business owner does not have a listing, the attached Fixed Asset Listing Form may be completed and submitted. If the listing is incomplete or is not provided at all, a representative of the Rutherford County Assessor’s Office will be required to visit the place of business and assist in preparing the listing.
  • Audit of Large Accounts – For accounts with an appraised value of $100,000 or greater, a detailed audit is required. The audit includes reconciliation between the cost listed on the personal property schedule and the cost identified in the financial records of the business. The business owner is required to make available various documents.  Please see Documents Required for Each Year Under Audit – Large Accounts for additional information. In addition, a physical inspection of the business operation is required.